With a reverse mortgage loan (sometimes referred to as a a home equity conversion loan), borrowers of a certain age may use home equity for living expenses without having to sell their homes. The lending institution pays you funds based on your home equity amount; you get a lump sum, a monthly payment or a line of credit. The borrowed money does not have to be paid back until the homeowner sells the home, moves away, or dies. You or representative of your estate must pay back the reverse mortgage funds, interest accrued, and finance charges at the time your house is sold, or you are no longer living in it.
Most reverse mortgages require youto be at least 62 years old, have a small or zero balance in a mortgage and use the house as your main residence.
Reverse mortgages are advantageous for retired homeowners or those who are no longer working and need to supplement their limited income. Social Security and Medicare benefits won't be affected; and the money is not taxable. Reverse Mortgages can have adjustable or fixed rates. The lending institution is not able to take the property away if you live past the loan term nor can you be required to sell your residence to pay off your loan even if the balance is determined to exceed property value. If you would like to learn more about reverse mortgages, feel free to call us at (619) 688-0011.
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